By 2016 online retail had acquired the majority of the “pre-planned, long distance” market, and was making significant inroads into the ‘walk-up’ market. Customers who previously used self-service machines, or bought their tickets on-board, were saving themselves time by buying tickets using mobile apps.
There remained, however, one part of the market that had shunned the move online – commuters.
Throughout my 24 years in online retail, I’d often been asked to review the case for a commuter proposition. It was difficult for two main reasons:
- Commission: When trainline launched in the late 1990s, several commuter train operators in London were worried that online sales would abstract sales from their ticket offices, leaving them with fixed cost, and reduced income. They passed a resolution that online ticket sales of season tickets would earn no commission, to effectively prevent trainline and others addressing this market. (This was more recently changed so that online season tickets attract the same 2% commission that was paid generally for season ticket sales, but it still did little more than cover the payment card processing costs).
- Customers: I held many focus groups and one-to-one interviews with commuters over the years, and found that, in the main, they had no desire to change their behaviour. They did not consider it a major chore once a month (or once a year in some cases) to visit the ticket office and renew their season ticket. It was engrained behaviour and part of their routine. Many ‘knew’ their local ticket office clerk, and when parting with £300 for a monthly ticket, or £3000 for an annual ticket, they preferred to do that in person. Customers were sceptical about buying through a third-party – who would be accountable if their ticket stopped working or something went wrong?
The online sales of season tickets, therefore, remained largely the preserve of train companies, generally made available reluctantly with little if any marketing push behind it.
Commuter Club
Figure 19: Commuter Club ticket wallet
One company that did make inroads into online season ticket sales was Commuter Club. Founded by a pair of fintech entrepreneurs, they recognised that annual season tickets cost around 14% less than 12 monthly tickets, and also came with the additional benefit of a “Network Goldcard”.
However, many commuters did not have the cash flow to buy annual tickets, and therefore paid more for less. Commuter Club’s solution was to give customers an annual season ticket, and allow them to pay for this in monthly instalments via a personal finance agreement. Low interest rates at the time made it possible to save money for the customer, whilst making an income from the finance agreement. The regulated nature of lending and personal finance made this a proposition that those without the relevant FCA approvals could not emulate.
Commuter Club saw strong growth up until the Covid pandemic, at which point almost all of its customers sought to cancel their season tickets and associated finance agreements. The business looked for the opportunity to relaunch as restrictions lifted, but the season ticket market was a fraction of its previous size, rail strikes loomed, and the prospect of rising interest rates cast doubt over whether customer savings could still be delivered. The business stopped taking new customers at Christmas 2021.
Flexi-seasons and Digital Season Tickets
The pandemic ushered in changes to the commuter market. A new ticket type – the “flexi- season” was introduced, that was very much a digital product either via smartcard or mobile apps.
It also coincided with the evolution of the barcode ticket standard to make it more suitable for multi-use tickets. Previously barcode tickets were issued as a barcode that had the same duration as the ticket – for example an Anytime Day Return would be valid for one day, and Anytime Return for one month. When the ticket was inspected with a barcode reader, this would trigger a countdown to mark the ticket as used and no longer valid. Therefore, the scope to fraudulently use the ticket multiple times was limited.
However, with season tickets the ticket could not be revoked once it has been used, as by design it can be used multiple times, thereby creating a cloning risk. The solution was to apply a technique commonplace in the bus industry, and frequently issue short duration validity barcodes. This enhancement to the barcode standard made it suitable for use for season tickets, and many train companies chose to allow their season ticket holders to benefit from digital ticketing.